LG Electronics to Wind Up Smartphone Business by July 31

South Korea's LG Electronics will close its smartphone shop up by July 31. This development comes after LG failed to find a buyer. More notably, this will make the electronics giant the first major smartphone brand to completely pull from the market.

Time's Up for LG Electronics in the Smartphone Market

LG's smartphone division, the smallest of its five divisions accounting for about 7% of revenue, is expected to be wound down by July 31. The moves comes after talks to sell part of the business to Vietnam's Vingroup fell through. Sources report that deal fell through due to differences about various terms.

LG has 10% market share in North America, which makes it the 3rd largest smartphone brand in the country. After this move, the brand's share is there for the taking for both Samsung and Apple. In preliminary estimates, Samsung is looking at getting the lion's share of that market share. This is because the IT giant has more mid-range products to offer than Apple, and LG's market majorly consists of mid-range phones.

Interestingly, LG is also big in Latin America, where it occupies the 5th spot. What's stopping Chinese brands from getting a meaningful share in the US is due to rather hostile bilateral relations. However, there is no such problem in Latin America, meaning Chinese brands will be fast to gobble up LG's share.

The reason for this shutting down is the high amount of losses. Over the last six years, the mobile division has posted losses amounting to $4.5 billion. In its hay day, LG was the third largest smartphone maker in the world. The smartphone brand was synonymous with cutting edge, sometimes ridiculously overpowered, smartphones. LG hit its dizzying heights in 2013. Sadly, it was all downhill from then on.

Key reasons of this spectacular fall from grace comes hand in hand with a fall in quality. Its flagship models came with bad software and overhyped and impractical hardware. Couple that with with poorly-timed software updates and we have the end result.

Similar to LG, brands such as Nokia, HTC and Blackberry have also fallen from grace. However, they are still alive and kicking, even though it is not exactly what each of them hoped for.

According to Counterpoint, LG shipped 23 million phones last year, getting 2% of the global share. In contrast, Samsung shipped 256 million units.

What Next for LG Electronics?

In a statement, LG said that dropping out of the fiercely competitive sector would allow it to focus on growth areas. These areas include electric vehicle components, connected devices and smart homes. In South Korea, the division's employees will be moved to other LG Electronics businesses and affiliates. Everywhere else, the local requirements will dictate the restructure.

LG plans to retain its 4G and 5G core technology patents as well as core R&D personnel. Moreover, it will continue to develop communication technologies for 6G. LG is also looking at the opportunity to license out the said IP.

For the people who own an LG smartphone, all will not end abruptly. LG has said that it will provide service support and software updates for them. The period of time which will "vary by region", it added.